Telstra Group Limited · ASX:TLS
Telstra — Investor Day (November 2007)
40 slides from Telstra's investor day presentation, Nov 1, 2007
Slide 1: Investor Day slide presentation by Telstra Senior Executives
1 November 2007 Office of the Company Secretary For personal use only The Manager Level 41 242 Exhibition Street Company Announcements Office MELBOURNE VIC 3000 Australian Stock Exchange AUSTRALIA 4th Floor, 20 Bridge Street Telephone 03 9634 6400 SYDNEY NSW 2000 Facsimile 03 9632 3215 ELECTRONIC LO
Slide 2: Agenda
Agenda For personal use only Welcome and Introduction Ben Spincer Gaining Further Competitive Advantage Sol Trujillo Update of FY08 Guidance and Long Term Management Objectives John Stanhope Greg Winn Overview of Transformation Stuart Lee Wireless Update Mike Wright Wireline Transformation Hugh Brad
Slide 3: Disclaimer
Disclaimer For personal use only • These presentations include certain forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those ex
Slide 4: Investor Day 2007: Extending our competitive advantage
For personal use only Investor Day 2007 Sol Trujillo Chief Executive Officer Extending our competitive advantage 1
Slide 5: What we said we'd do: The 2005 Strategy to transform Telstra
What we said we’d do: The 2005 Strategy to transform Telstra For personal use only C omms, Fe we r Ex pand Info Partne rs in Too many C ore Transactions, Ente rtainme nt Competency Areas O ne Australia Factory Low Marke t Inte grated C ost 1st, 2 nd Mode l Base d C ompany Mode l and 3 rd Manageme nt
Slide 6: Mobiles data revenue growth and leading global peers
Mobiles Data Revenue Growth For personal use only 93.5% 22.4% Non-SMS SMS $350m Data Revenue in Q1 Data Revenue in Q1 49% $230m World 61% Leading 51% 39% $0m Q1 2007 Q2 Q3 Q4 Q1 2008 Non-SMS Data Revenue SMS Data Revenue Wireless – leading global peers 3G as % of total mobile base 50-70% in 2010 30%
Slide 7: Postpaid cohort analysis and broadband market share
Postpaid Cohort Analysis For personal use only Like-for-like 2G to 3G ARPU uplift 260% 15% 8% Voice SMS Interactive data Broadband – retail market share and ARPU 50% Retail Market Share* Retail ARPU $56 $54 Market Share 45% $52 ARPU $50 40% $48 2H05 1H06 2H06 1H07 2H07 1Q08 * Includes retail broadba
Slide 8: Wireless broadband SIOs and PSTN retail line loss
Wireless Broadband SIOs For personal use only 400,000 +70k Next G TM EVDO 200,000 0 H2 06 H1 07 H2 07 Q108 PSTN – retail line loss 5% 0% H2 05 H1 06 H2 06 H1 07 H2 07 Q108 -5% EU Average US Average Telstra -10% 5
Slide 9: Integrated Company, Integrated Services
T[Life] Retail Store, Sydney For personal use only Integrated Company, Integrated Services BigPond Cable Extreme® 6
Slide 10: Update of FY08 Guidance & Long Term Management Objectives
For personal use only Update of FY08 Guidance & Long Term Management Objectives John Stanhope CFO Update of FY08 Underlying Performance Previous FY08 Guidance Updated FY08 Guidance Major Drivers Total Revenue 2.0% to 3.0% pa No change +$114m Stronger Sales* Growth - $30m W’sale ULL/LSS -$52m - $91m
Slide 11: Update of FY08 Reported Performance
Update of FY08 Reported Performance For personal use only Includes Foxtel distribution Previous FY08 Guidance Updated FY08 Guidance Major Drivers Total +$100m Foxtel Dist’n Revenue 2.0% to 3.0% pa No change +$114m Stronger Sales Growth +$48m - $30m W’sale ULL/LSS - $91m FX Translat ion EBITDA -$45m
Slide 12: Update of 1H08 Guidance and Long Term Objectives
Update of 1H08 Guidance For personal use only Underlying (excl Foxtel distribution) Previous 1H08 Guidance Updated 1H08 Guidance Note: 1H08 growth will be EBITDA Slight decline Flat to slightly impacted due to 1H07 positive including: EBIT Implied decline Slight decline • MTA adjustment $37m • AAS p
Slide 13: Pathway to new revenue objective
Pathway to new revenue objective For personal use only 400-600m 0-300m $25.1-25.7b 1.0-1.3b $23.7b 1.0-1.4b 1.1-1.5b FY07 Fixed Mobiles Internet Sensis Other FY10 (incl SouFun) 4
Slide 14: Overview of Transformation: timeline for the build
For personal use only Overview of Transformation Greg Winn Chief Operations Officer Update on timeline for the Transformation build Major Milestones Nov 05 Nov 07 3G wireless network launch Q1 07 Oct 06 IP/MPLS Core June 07 Aug 06 Multi Service Edge Dec 07 Dec 06 Next Generation Ethernet June 09 Jun
Slide 15: Delivering real outcomes and benefits
And we are delivering real outcomes and benefits For personal use only 3G 850MHz Peak network speeds Next IPTM network Next GTM Network nationally (14.4 Mbps downlink and 1.9 Mbps • IP/MPLS Core 6000 Base Stations uplink) • EA build >2,500 CDMA 200km range in selected • MSE build areas Next IPTM net
Slide 16: Wireless broadband data cost comparison and traffic
Wireless Broadband Data cost comparison For personal use only Network Unit Cost of Voice as a % of GSM* Network Cost per MByte as % of GPRS* 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% GSM Next G™ Future Voice GPRS EDGE WCDMA HSDPA HSPA+ (R99) today Optimisation * Telstra derived relat
Slide 17: IP traffic growth and Next IP network scalability
For personal use only TBytes/Month 10 ,000 20 ,000 30 ,000 40 ,000 50 ,000 60 ,000 70 ,000 80 ,000 90 ,000 F eb - A pr 0 6 J un--0 6 A ug 0 6 - 12 14 16 18 20 O ct 0 6 D ec -0 6 - F eb 0 6 A pr-0 7 - J un-0 7 A ug 0 7 -0 FY05 O ct 7 D ec -0 7 -0 F eb- 7 A pr 0 8 -0 8 J un A ug-0 8 - O ct 0 8 D ec -0
Slide 18: IT systems out and industry recognition
IT Systems Out For personal use only Nov 07 # of Legacy Systems Note: 1200 systems identified in November ’05: another 150 systems subsequently identified Industry recognition for our transformation • Global Telecoms Business Magazine’s 2007 Innovation Award • ‘Best Mobile Entertainment’ and ‘Best o
Slide 19: Telstra's Transformation Program
Telstra’s Transformation Program: Presentation Introduction For personal use only Learning Academy Driving improvements into our Operations Stuart Lee Procurement Billing Operat ions Property Wireless Transformat ion Wireless 3G Enablement providing services city to country Mike Wright Wireline Tran
Slide 20: The Factory: Telstra Learning Academy
For personal use only The Factory Stuart Lee Executive Director Program Office Telstra Learning Academy Trained > 16,000 people Curriculum library 1,633 courses, including 169 newly developed Built 2 new world-class training facilities (70 locations nationwide) Equipping our people to leverage trans
Slide 21: Smarter procurement reducing costs
Smarter procurement reducing costs For personal use only • Fully leveraging vendor relationships Procurement savings $129M Sep 06 to end 06/07 • Less time managing multiple vendors • Phase 1 IBM supply chain agreement IBM Phase 1: On track for incremental − Single company-wide view of all vendor spe
Slide 22: Property rationalisation and billing operations
Property rationalisation on track For personal use only Exiting Leases 66 Cost reductions1 $34.8m Reduction in space1 107,020 m2 Artist’s impression of new Brisbane headquarters Note1: Since 2004/05 in “non-network” portfolio Billing & Credit Operations Improved bill formatting and delivery capabili
Slide 23: Wireless Update
For personal use only Wireless Update Mike Wright Executive Director, Wireless Nov 2005 Wireless Transformation Strategy • Single National City to Country Network • 850 Mhz Spectrum • Remove network build duplication and duplicated costs • A new, lower unit cost platform and dominant technology road
Slide 24: Wireless Transformation Scorecard
Wireless Transformation Scorecard For personal use only Build and launch 3G 850 MHz city-to-country Next G™ network Oct 2006 3 Upgrade to National 14.4 HSDPA and 1.9 HSUPA Feb 2007 3 Cell range extension – up to *200 kilometres Feb 2007 3 Develop and deploy Next G™ Wireless Link Jul 2007 3 Next G™ n
Slide 25: Next G vs CDMA site comparison
For personal use only 6000 5000 4000 3000 2000 1000 0 Next GT M CDMA Site Comparison Next G™ network published coverage footprint Published coverage of the next largest 3G network (3GIS) – Next G™ network over 100 times larger in area ‘As at October 2006, sourced from Telstra records and competitor
Slide 26: Next G vs Optus 3G and OPEL coverage
For personal use only 6000 5000 4000 3000 2000 1000 0 Next GT M Optus 3G* Site Comparison Published Next G™ network coverage * Derived from ACMA registrations and Mob ile Carrier Forum National Site Archive as at 29 Jun. 07 6000 5000 4000 3000 2000 1000 0 Next GT M Optus Opel 3G* WiMax# Site Compari
Slide 27: Networks compared
For personal use only More than 120,000 kilometres of drive surveys across Australia Networks compared “Hypothetical” % Next G™ network CDMA network Optus 3G network OPEL network Base Fibre, ADSL2+ and Stations >6,000 3,480 >2,200* 1,361 WiMAX sites ### Coverage >2 Million Sq Km >1.6 Million Sq Km 6
Slide 28: Roadmap to LTE & 4G
Roadmap to LTE & 4G - increased capacity/ lower costs Meeting demand - incremental network upgrades For personal use only Network data usage trends The HSDPA ‘pipe’ – now 14.4Mbps peak - supports a mix of 1.8 / 3.6 / 7.2 devices simultaneously Next G™ network BH Rate [Mbps] The HSDPA ‘pipe’ at launc
Slide 29: Wireline Transformation
For personal use only Wireline Transformation Hugh Bradlow Chief Technology Officer A Technology Investment for the Future • Leading Broadband mobile solution • Carrier grade IP solution 1
Slide 30: Customer demand for high quality broadband services
Customer demand for high quality broadband services For personal use only Wireline Broadband Access Telepresence, Triple Play Triple Play Immersive 3D Web Surfing Gaming SDTV HDTV Environments, etc Speed 64kbps 256kbps 1.5 Mbps 12 Mbps 25 Mbps 100+ Mbps Networked Home Teleprescence ^ peak download s
Slide 31: Next IP network and PSTN Transformation
Next IPTM network – investment for the long term, scales cost effectively For personal use only Next IPTM Scale Limit logarithmic scale Traffic 2005 Now 2010 2020 2030+ Time PSTN Transformation • Deploy first two of five Softswitch pairs by June 30, 2008 MSAN Ethernet Softswitch • Multi-Service Acce
Slide 32: Capping and exiting network platforms by 2010
Transformation is on-track to cap and exit a net total of ~65% of network platforms by 2010 For personal use only 400 Maintained for long-term Investment capped or exited 300 200 Nov,05 100 Now Dec,10 0 Baseline Caps / Exits Active Inventory Caps / Exits Target Inventory Achieved Scheduled 144 platf
Slide 33: Transformation driving service improvements and productivity
For personal use only Telstra Services Michael Rocca Group Managing Director, Telstra Services Transformation driving service improvements and productivity ADSL Field Workforce Cost of Trouble reports Held Orders Productivity Activation Per 100 SIO Improvement since Nov 2005 Reduced by more Improved
Slide 34: Transforming contracting model and contact centres
Transforming $600m a year contracting model For personal use only Reducing vendor base from over 175 to three $75M annualised cash savings Improving contact centre effectiveness Number of sites 76% Site-specific activities 41% Staff utilisation 9% >$40M p.a. Staff occupancy 12% in benefits Cross-ski
Slide 35: Improving field workforce effectiveness
Improving field workforce effectiveness For personal use only Improved processes = less travel = eliminated roughly 600 tonnes of CO2 emissions* Travel Time Per Task 26.00 Tools and equipment 25.50 25.04 25.00 Improved training Linking & Bundling Focus 24.50 Sat-nav, GPS, in-van laptops FW Kick Off
Slide 36: Transforming Telstra's IT environment
For personal use only Transforming Telstra’s IT environment Tom Lamming John McInerney IT Transformation Simplifying our IT environment to better serve our customers • Consumer Transformation − Focus is to migrate the consumer customers to the new customer care and billing platforms. • OSS migration
Slide 37: Transformation Releases
Transformation Releases For personal use only • First release (TR1) focuses on deploying new customer care, billing and product management systems for our consumer customers 9 In Production 9 Customer migration commenced – complete June 2008 • Second release (TR2) implements new fulfilment and inven
Slide 38: Consumer Transformation
Consumer Transformation For personal use only Enhanced Service Levels Speed of Delivery Increased Productivity •Single view of customer by •Streamlined processes, fewer •Single bill for most products all consult ants. repeat activities, more automat ion •Decreased billing calls •Consultants handle m
Slide 39: Deployment commenced August '07
Deployment Commenced August ‘07 For personal use only • CMP - deployed end of August now processing all Telstra’s raw event records, In Production processing 100-120 million per day. • Mediation Overlay - deployed controlling routing of call records between legacy and new systems Operations Legacy •
Slide 40: Key IT Performance Metrics
Key IT Performance Metrics For personal use only Production Support & Maintenance (Legacy) Capex Driver - IT TR1/ 2 build TR1 in production Peak $1 .1 b 160 TR2 in production $ million 0 FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 Data Centre Operations Savings IT Systems Out 40% 1500 # o